Staples And Office Depot Considering Business Merger
On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Mergers & Acquisitions on Tuesday, October 27, 2015.
Competition is an important driver of innovation and efficiency in the world of business. It is an important component of the free market in California. This is why lawmakers have created laws designed to protect competition by making sure a company does not become too large and form a monopoly over a market. These laws are keeping the business merger between Staples and Office Depot from moving forward.
One of the problems is that both companies, in addition to their retail stores, operate office supply delivery services for corporate clients. Authorities are afraid that a merger would make the new company too dominant in this particular market niche. A possible solution to this problem would be to have Staples sell its office supply delivery business to the company's competitor, Essendant. The Federal Trade Commission (FTC) has approached Essendant with the idea of possibly acquiring this particular services part of Staples.
Part of what makes the merger attractive is that both Staples and Office Depot have closed retail locations in areas where their businesses overlap with one another. Office Depot is already planning on closing 400 stores by the end of 2015 whether or not the merger is allowed to move forward. Office Depot and Staples are the two largest commercial office suppliers. Essendant is a minor competitor looking to expand its reach in the market of wholesale office suppliers.
On the other hand, even if the FTC allows the business merger to move forward, there will still be various terms that will need to be agreed upon in order to complete the deal. Just like with any business merger in California, this will require that the proper legal documents and paperwork be drafted and filed with the appropriate regulating agencies. However, one should be especially careful since a mistake during this important legal process can be financially detrimental to any business venture.
Source: consumerist.com, "Sale Of Commercial Supply Business Could Let Staples-Office Depot Merger Go Through", Laura Northrup, October 26, 2015